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Monday, Jun 5, 2023

CHAD Therapeutics in Funding Turmoil

CHAD Therapeutics Inc. faces possible bankruptcy after suspending operations due to its inability to raise additional capital. Following the sale of its oxygen business earlier this year, the Chatsworth-based company has sought additional capital to support the marketing of the products it has developed for the sleep disorder market. CHAD recently reached an agreement in principle for a $2 million investment by a private equity group. Among the terms of the proposed investment, the private equity group required that all back salary and severance obligations to officers and former officers be settled for no more than $250,000 plus stock in the company. CHAD CEO Earl Yager and Chairman Thomas Jones, who together are owed $293,750 in back salary, agreed to settle this obligation as well as their severance contracts for company stock. The independent members of the company’s board of directors, who had agreed to defer director fees, would also receive no cash for unpaid director’s fees. Three of the four other officers and former officers agreed to receive pro-rata shares of the $250,000 in cash plus company stock, but one former officer would not agree. As a result, the private equity group advised the company that it was unwilling to proceed with the contemplated financing. The board of directors is considering liquidation of the company under Chapter 7 of the federal bankruptcy laws.

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